Thursday, August 13, 2009

The Euribor, that artificial interest rate which has been used so successfully to produce windfall profits at the expense of Spanish mortgage payers, has slowly come down to a level which almost approximates to the real interest rate. All of this should be of enormous benefit to those who have been struggling to keep up with massive mortgage payments as a result of having to buy during the property bubble. This will not be the case for many thanks to the ingenuity of the banks. Many mortgage holders find that their bank has set a minimum level of interest on their mortgage which currently means that they can be paying more than double the figure of the Euribor. The banks protest at criticism, saying that they also set a maximum level. However, that maximum will only be ever hit if we get a rate of price increases that sets us on a path towards hyperinflation. Spain isn't quite there yet, with 5 consecutive months of "official" deflation.

Meanwhile, our good friend Gerardo "Aguirre es cojonuda" Díaz Ferrán has got yet another suggestion for getting him out of the crisis at the expense of everyone else. Wages should be cut so that those whose mortgage payments have fallen feel no benefit. Careful, we're not talking about everybody's wages and especially not about Gerardo's pay packet. Spain's top executives have continued to increase their salaries even in the midst of the crisis. I welcome this news, mostly because it means we can now treat those who claim that such lavish rewards are in some way "performance related" in the same way as we would regard members of any crazy religious sect.

1 comment:

The system is set up in such a way that the banks are like the house in a casino: whatever happens, they always win.

If the economy grows, profits are made on the bank of credit expansion, increase in asset prices and banking intermediation. Mega-bonuses are then paid. If the economy slows, banks withdraw credit at short notice, increase the cost of credit and pay paltry interest to savers. Mega-bonuses still paid to the top elite. And if there is a banking crisis like this one, then they cajole governments to bail them out to prevent a cataclysmic crisis like in the Great Depression. The top elite in banking still get they mega-bonuses.

And don’t get me started on the so-called “talent”. I have never heard such a ludicrous and stupid explanation to justify salaries that are the multiples of what top doctors, surgeons and lawyers can earn. It is easy to dismiss them as a “sect” (they are) but the problem is that they are the “ruling sect”.